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Florida Nurse Practitioner Convicted for Involvement in $200 Million Medicare Fraud Scheme Involving Clinical Laboratory Tests, Other Procedures

Federal prosecutors allege that this nurse practitioner ordered more genetic tests for Medicare beneficiaries than any other provider during 2020

Cases of Medicare fraud involving clinical laboratory testing continue to be prosecuted by the federal Department of Justice. A jury in Miami recently convicted a nurse practitioner (NP) for her role in a massive Medicare fraud scheme for millions of dollars in medically unnecessary genetic testing and durable medical equipment. She faces 75 years in prison when sentenced in December.  

In their indictment, federal prosecutors alleged that from August 2018 through June 2021 Elizabeth Mercedes Hernandez, NP, of Homestead, Florida, worked with more than eight telemedicine and marketing companies to sign “thousands of orders for medically unnecessary orthotic braces and genetic tests, resulting in fraudulent Medicare billings in excess of $200 million,” according to a US Department of Justice (DOJ) news release announcing the conviction.

“Hernandez personally pocketed approximately $1.6 million in the scheme, which she used to purchase expensive cars, jewelry, home renovations, and travel,” the press release noted.

Hernandez was indicted in April 2022 as part of a larger DOJ crackdown on healthcare fraud related to the COVID-19 outbreak.

Luis Quesada

“Throughout the pandemic, we have seen trusted medical professionals orchestrate and carry out egregious crimes against their patients all for financial gain,” said Assistant Director Luis Quesada (above) of the FBI’s Criminal Investigative Division, in a DOJ press release. Clinical laboratory managers would be wise to monitor these Medicare fraud cases. (Photo copyright: Federal Bureau of Investigation.)

Nurse Practitioner Received Kickbacks and Bribes

Federal prosecutors alleged that the scheme involved telemarketing companies that contacted Medicare beneficiaries and persuaded them to request genetic tests and orthotic braces. Hernandez, they said, then signed pre-filled orders, “attesting that she had examined or treated the patients,” according to the DOJ news release.

In many cases, Hernandez had not even spoken with the patients, prosecutors said. “She then billed Medicare as though she were conducting complex office visits with these patients, and routinely billed more than 24 hours of ‘office visits’ in a single day,” according to the news release.

In total, Hernandez submitted fraudulent claims of approximately $119 million for genetic tests, the indictment stated. “In 2020, Hernandez ordered more cancer genetic (CGx) tests for Medicare beneficiaries than any other provider in the nation, including oncologists and geneticists,” according to the news release.

The indictment noted that because CGx tests do not diagnose cancer, Medicare covers them only “in limited circumstances, such as when a beneficiary had cancer and the beneficiary’s treating physician deemed such testing necessary for the beneficiary’s treatment of that cancer. Medicare did not cover CGx testing for beneficiaries who did not have cancer or lacked symptoms of cancer.”

In exchange for signing the orders, Hernandez received kickbacks and bribes from companies that claimed to be in the telemedicine business, the indictment stated.

“These healthcare fraud abuses erode the integrity and trust patients have with those in the healthcare industry … the FBI, working in coordination with our law enforcement partners, will continue to investigate and pursue those who exploit the integrity of the healthcare industry for profit,” said Assistant Director Luis Quesada of the Federal Bureau of Investigation’s Criminal Investigative Division, in the DOJ press release.

Conspirators Took Advantage of COVID-19 Pandemic

Prosecutors alleged that as part of the scheme, she and her co-conspirators took advantage of temporary amendments to rules involving telehealth services—changes that were enacted by Medicare in response to the COVID-19 pandemic.

The indictment noted that prior to the pandemic, Medicare covered expenses for telehealth services only if the beneficiary “was located in a rural or health professional shortage area,” and “was in a practitioner’s office or a specified medical facility—not at a beneficiary’s home.”

But in response to the pandemic, Medicare relaxed the restrictions to allow coverage “even if the beneficiary was not located in a rural area or a health professional shortage area, and even if the telehealth services were furnished to beneficiaries in their home.”

Hernandez was convicted of:

  • One count of conspiracy to commit healthcare fraud and wire fraud.
  • Four counts of healthcare fraud.
  • Three counts of making false statements.

Medscape noted that she was acquitted of two counts of healthcare fraud. The trial lasted six days, Medscape reported.

Hernandez’s sentencing hearing is scheduled for Dec. 14.

Co-Conspirators Plead Guilty

Two other co-conspirators in the case, Leonel Palatnik and Michael Stein, had previously pleaded guilty and received sentences, the Miami Herald reported.

Palatnik was co-owner of Panda Conservation Group LLC, which operated two genetic testing laboratories in Florida. Prosecutors said that Palatnik paid kickbacks to Stein, owner of 1523 Holdings LLC, “in exchange for his work arranging for telemedicine providers to authorize genetic testing orders for Panda’s laboratories,” according to a DOJ press release. The kickbacks were disguised as payments for information technology (IT) and consulting services.

“1523 Holdings then exploited temporary amendments to telehealth restrictions enacted during the pandemic by offering telehealth providers access to Medicare beneficiaries for whom they could bill consultations,” the press release states. “In exchange, these providers agreed to refer beneficiaries to Panda’s laboratories for expensive and medically unnecessary cancer and cardiovascular genetic testing.”

Palatnik pleaded guilty to his role in the kickback scheme in August 2021 and was sentenced to 82 months in prison, a DOJ press release states.

Stein pleaded guilty in April and was sentenced to five years in prison, the Miami Herald reported. He was also ordered to pay $63.3 million in restitution.

These federal cases involving clinical laboratory genetic testing and other tests and medical equipment indicate a commitment on the DOJ’s part to continue cracking down on healthcare fraud.

—Stephen Beale

Related Information:

Nurse Practitioner Convicted of $200M Health Care Fraud Scheme

Florida Nurse Practitioner Convicted in $200 Million Medicare Scheme

Florida Nurse Convicted for Fraudulent Orders Billing Medicare for $200M

South Florida Nurse Convicted of Medicare Scheme for Approving $200 Million in Bogus Products

Justice Department Announces Nationwide Coordinated Law Enforcement Action to Combat COVID-19 Health Care Fraud

Laboratory Owner Pleads Guilty to $73 Million Medicare Kickback Scheme

Laboratory Owner Sentenced to 82 Months in Prison for COVID-19 Kickback Scheme

Bankruptcies and Store Closings Are Signs of Tough Times Ahead for US Retail Pharmacy Chains

Plans by several national retail pharmacy chains to expand primary care services and even some clinical laboratory test offerings may be delayed because of financial woes

Times are tough for the nation’s retail pharmacy chains. Rite Aid Corporation, headquartered in Philadelphia, closed 25 stores this year and has now filed for bankruptcy. In a press release, the retail pharmacy company announced it has “initiated a voluntary-court supervised process under Chapter 11 of the US Bankruptcy Code,” and that it plans to “significantly reduce the company’s debt” and “resolve litigation claims in an equitable manner.”

Rite Aid may eventually close 400 to 500 of its 2,100 stores, Forbes reported.

Meanwhile, other retail pharmacy chains are struggling as well. CVS Health, headquartered in Woonsocket, Rhode Island, and Walgreens Boots Alliance of Deerfield, Illinois, are each closing hundreds of stores, according to the Daily Mail.

They are each experiencing problems with labor costs, theft, being disintermediated for prescriptions by pharmacy benefit managers (PBMs), and probably building too many stores in most markets.

This is a significant development, in the sense that Walgreens, CVS, and Walmart are each working to open and operate primary care clinics in their stores. This is a way to offset the loss of filling prescriptions, which has migrated to PBMs. Primary care clinics are important to the revenue of local clinical laboratories, but retail pharmacy chains do not yet operate enough primary care clinics in their retail pharmacies to be a major influence on the lab testing marketplace.

Jeffrey Stein

“With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives, and accelerating the execution of our turnaround strategy,” said Jeffrey Stein (above), Rite Aid’s CEO/Chief Restructuring Officer, in a press release. Clinical laboratory leaders may want to closely monitor the activities of the retail pharmacies in their areas. (Photo copyright: Rite Aid.)

Multiple Pharmacy Companies at Financial Risk

Rite Aid Corporation (NYSE: RAD) confirmed it continues to operate its retail and online platforms and has received from lenders $3.45 billion in financing to support the company through the bankruptcy process. 

However, according to the Associated Press (AP), Rite Aid has experienced “annual losses for several years” and “faces financial risk from lawsuits over opioid prescriptions,” adding that the company reported total debts of $8.6 billion.

Additionally, the US Department of Justice (DOJ) filed a complaint “alleging that Rite Aid knowingly filled unlawful prescriptions for controlled substances,” explained a DOJ press release.

Rite Aid is not the only retail pharmacy brand dealing with unwelcome developments. Fortune reported last year that Walgreens and CVS paid a combined $10 billion to 12 states for “involvement in the opioid epidemic.”

Walgreens intends to close 150 US and 300 United Kingdom locations, its former Chief Financial Officer James Kehoe shared in a third quarter 2023 earnings call transcribed by Motley Fool.

And in a news release, CVS announced plans to close 900 stores between 2022 and 2024.

Pharmacy Companies’ Investment in Primary Care 

Though they are experiencing difficulties on the retail side, Walgreens and CVS have significantly invested in primary care.

In “Walgreens Continues Expansion into Primary Care as VillageMD Acquires Starling Physicians Group with 30 Locations in Connecticut,” we covered how Walgreens’ VillageMD primary care clinics business was expanding its footprint by acquiring Starling Physicians, a multi-specialty physicians group with 30 locations in Connecticut.

In that same ebrief, we reported on CVS’ acquisition of Oak Street Health, a Chicago-based primary care company, for $10.6 billion. CVS plans to have more than 300 healthcare centers by 2026.

“We looked at our business, and we said, ‘We’re seeing an aging population.’ We know people don’t have access to primary care. We know that value-based care is where it’s going. We know that there’s been a renaissance in home (care). So that’s kind of how we approached our acquisitions,” Karen Lynch, CVS Chief Executive Officer told Fortune.

Other Challenges to Retail Pharmacies

It could be that these major pharmacy chains are hoping entry into primary care will offset the loss of sales from prescriptions that have migrated to PBM organizations.

In addition to reimbursement challenges, retail pharmacies are reportedly experiencing:

  • High labor costs,
  • Competition from online, bricks-and-mortar, and grocery businesses, and
  • Effects from the work-at-home trend, among other struggles.

“I think there’s a number of challenges which are coming to a head. One, you have ongoing reimbursement pressure. The reimbursement level for drugs continues to decrease, so profit margin on the core part of the business is under pressure,” Rodey Wing, a partner in the health and retail practices of global strategy and management consulting firm Kearney, told Drug Store News.

Additionally, the pharmacy’s drug sales need to be high enough to retain pharmacists, who are difficult to recruit in a post-pandemic market, Drug Store News explained.

And in the retail space where products are displayed, some pharmacies struggle to compete with Amazon on convenience and with “dollar” stores on price. And with more people working from home, retail pharmacies are seeing less foot traffic, Drug Store News noted. 

Retail pharmacy companies also have competition from pharmacies conveniently situated in grocery and big-box stores, Forbes reported. These include: 

Walmart, for its part, reduced operating hours of pharmacies at more than 4,500 sites, Daily Mail reported.

Thus, medical laboratory leaders would be wise to keep an eye on market changes in their local retail pharmacies. Some locations are equipped with clinical laboratory services and a closure could give local labs an opportunity to reach out to patients and physicians who need access to a new testing provider.

—Donna Marie Pocius

Related Information:

Rite Aid Takes Steps to Accelerate Transformation and Position Company for Long-Term Success    

Drugstore Downsizing: CVS, Walgreens, and Rite Aid to Close Nearly 1,500 Stores

Pharmacy Chain Rite Aid Files for Bankruptcy Amid Declining Sales and Opioid Lawsuits

US Files Complaint Alleging Rite Aid Dispensed Controlled Substances in Violation of the False Claim Act and the Controlled Substances Act

Rite Aid Files for Bankruptcy in the Face of Massive Debts and ‘Potentially Significant’ Claims for Role in the Opioid Epidemic

Walgreens Boots Alliance Q3 2023 Earnings Call

CVS Health Announces Steps to Accelerate Omnichannel Health Strategy

CVS CEO Sees Changes Coming ‘Faster than a Freight Train’ for Medicare. She’s Betting Billions She Can Build a New American Healthcare System

Threats and Opportunities Facing Retail Pharmacy

As CVS Says It Will Close 900 Stores, Here Are Three More Big Pharmacy Chains Which Are Shutting Locations and Cutting Hours

Walgreens Continues Expansion into Primary Care as VillageMD Acquires Starling Physicians Group with 30 Locations in Connecticut

Southern California Physician and Clinical Laboratory Owners Charged in Federal Crackdown on Pandemic-Related Billing Fraud

Federal prosecutors build the new healthcare-related fraud cases on previous nationwide enforcement actions from 2022

Federal charges have once again been brought against a number of physicians and clinical laboratory owners in what the US Department of Justice described as the “largest ever” coordinated nationwide law enforcement effort against COVID-19 pandemic-related healthcare fraud.

In total, the DOJ filed criminal charges against 18 defendants in five states plus the territory of Puerto Rico, according to an April 20 press release.

The highest dollar amount of these frauds involved ENT physician Anthony Hao Dinh, DO, who allegedly defrauded the Health Resources and Services Administration (HRSA) COVID-19 Uninsured Program for millions of dollars, and Lourdes Navarro, owner of Matias Clinical Laboratory, for allegedly “submitting over $358 million in false and fraudulent claims to Medicare, HRSA, and a private insurance company for laboratory testing” while performing “COVID-19 screening testing for nursing homes and other facilities with vulnerable elderly populations, as well as primary and secondary schools,” the press release states. Both court cases are being conducted in Southern California courtrooms.

The DOJ’s filing of charges came rather speedily, compared to other cases involving fraudulent clinical laboratory testing schemes pre-pandemic. The amount of money each defendant managed to generate in reimbursement from the fraud represents tens of thousands of patients. If feds were paying $100 per COVID-19 test, then the $153 million represents 153,000 patients, in just 18 to 24 months.

Assistant Attorney General Kenneth A. Polite, Jr.

“Today’s announcement marks the largest-ever coordinated law enforcement action in the United States targeting healthcare fraud schemes that exploit the COVID-19 pandemic,” said Assistant Attorney General Kenneth A. Polite, Jr. (above), in an April 20 DOJ press release. “The Criminal Division’s Health Care Fraud Unit and our partners are committed to rooting out pandemic-related fraud and holding accountable anyone seeking to profit from a public health emergency.” Clinical laboratory managers may want to pay close attention to the DOJ’s prosecution of these newest cases of alleged COVID-19 fraud. (Photo copyright: Department of Justice.)

Matias Clinical Laboratory, Inc.

The DOJ first brought fraud charges against Lourdes Navarro, owner of Matias Clinical Laboratory (Matias) in Baldwin Park, California, in April 2022. The Dark Daily covered that federal crackdown in “California Clinical Laboratory Owners among 21 Defendants Indicted or Criminally Charged for COVID-19 Test Fraud and Other Schemes Totaling $214 Million.

Then, in April of 2023, the DOJ filed expanded charges against the 18 defendants, including the owners of Matias which provided COVID-19 screening for schools, rehab facilities, and eldercare facilities, according to a United States Attorney’s Office, Central District of California press release.

Prosecutors allege that Navarro and her husband, Imran Shams, who operated Matias—also known as Health Care Providers Laboratory—perpetrated a scheme to perform medically unnecessary respiratory pathogen panel (RPP) tests on specimens collected for COVID-19 testing, even though physicians had not ordered the RPP tests and the specimens were collected from asymptomatic individuals.

In some cases, the indictment alleges, Navarro and Shams paid kickbacks and bribes to obtain the samples.

The indictment notes that reimbursement for RPP and other respiratory pathogen tests is generally “several times higher” than reimbursement for COVID-19 testing. Claims for the tests were submitted to Medicare and an unidentified private insurer, as well as the HRSA COVID-19 Uninsured Program, which provided support for COVID-19 testing and treatment for uninsured patients.

Claims to the HRSA falsely represented that “the tested individuals had been diagnosed with COVID-19, when in truth and in fact, the individuals had not been diagnosed with COVID-19 and the tests were for screening purposes only,” the First Superseding Indictment states.

The indictment further states that both Navarro and Shams had previously been barred from participating in Medicare and other federal healthcare programs due to past fraud convictions. Navarro, the indictment alleges, was reinstated in December 2018 after submitting a “false and fraudulent” application to the HHS Office of Inspector General.

It also alleges that Navarro and Shams concealed their ownership role in Matias so the lab could maintain billing privileges.

More Alleged Abuse of HRSA Uninsured Program

In a separate case, Federal prosecutors alleged that Anthony Hao Dinh, DO, an ear, nose, and throat physician in Orange County, California, engaged in a scheme to defraud the HRSA COVID-19 Uninsured Program as well.

Dinh, prosecutors allege, “submitted fraudulent claims for treatment of patients who were insured, billed for services that were not rendered, and billed for services that were not medically necessary.”

The criminal complaint, filed on April 10, alleges that Dinh submitted claims for approximately $230 million, enough to make him the program’s second-highest biller. He was paid more than $153 million, prosecutors allege, and “used fraud proceeds for high-risk options trading, losing over $100 million from November 2020 through February 2022,” states the US Attorney’s Office, Central District of California press release.

Dinh was also charged for allegedly attempting to defraud the federal Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. He faces a maximum sentence of 50 years in federal prison, the press release states.

Dinh’s sister, Hang Trinh Dinh, 64, of Lake Forest, California, and Matthew Hoang Ho, 65, of Melbourne, Florida, are also charged in the complaint, the Los Angeles Times reported.

Both of these cases are notable because of the size of the fraud each defendant pulled off involving COVID-19 lab testing. Clinical laboratory managers may want to review the original court indictments. The documents show the brazenness of these fraudsters and detail how they may have induced other doctors to refer them testing specimens.

Stephen Beale

Related Information:

Justice Department Announces Nationwide Coordinated Law Enforcement Action to Combat COVID-19 Health Care Fraud

DOJ Announces Nationwide Coordinated Law Enforcement Action to Combat Health Care Fraud Related to COVID-19—Summary of Criminal Charges

Criminal Complaint: US v. Dinh, et al.

Criminal Complaint: US v. Navarro

Newport Coast Physician Faces Federal Charges in Healthcare Fraud Cases

COVID Fraud Takedowns: Feds Charge 18 People, Including Doctors, with Raking in Nearly $500M from Scams

California Clinical Laboratory Owners among 21 Defendants Indicted or Criminally Charged for COVID-19 Test Fraud and Other Schemes Totaling $214 Million

Federal EKRA Law Continues to Cause Uncertainty in Clinical Laboratory Sales Compliance

Healthcare attorneys advise medical laboratory leaders to ensure staff understand difference between EKRA and other federal fraud laws, such as the Anti-kickback Statute

More than four years have passed since Congress passed the law and yet the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) continues to cause anxiety and confusion. In particular are the differences in the safe harbors between the federal Anti-Kickback Statute (AKS) and Stark Law versus EKRA. This creates uncertainty among clinical laboratory leaders as they try to understand how these disparate federal laws affect business referrals for medical testing.

According to a news alert from Tampa Bay, Florida-based law firm, Holland and Knight, “EKRA was enacted as part of comprehensive legislation designed to address the opioid crisis and fraudulent practices occurring in the sober home industry.” However, “In the four years since EKRA’s enactment, US Department of Justice (DOJ) enforcement actions have broadened EKRA’s scope beyond reducing fraud in the addiction treatment industry to include all clinical laboratory activities, including COVID-19 testing.”

It is important that medical laboratory leaders understand this law. New cases are showing up and it would be wise for clinical laboratory managers to review their EKRA/AKS/Stark Law compliance with their legal counsels.

David Gee

“Keeping in mind that [EKRA is] a criminal statute, clinical laboratories need to take steps to demonstrate that they’re not intending to break the law,” said attorney David Gee, a partner at Davis Wright Tremaine, in an exclusive interview with The Dark Report. “[Lab leaders should] think about what they can do to make their sales compensation program avoid the things the government has had such a problem with, even if they’re not sure exactly how to compensate under the language of EKRA or how they’re supposed to develop a useful incentive compensation plan when they can’t pay commissions.” David Gee will be speaking about laboratory regulations and compliance at the upcoming Executive War College in New Orleans on April 25-26, 2023. (Photo copyright: Davis Wright Tremaine.)

How Does EKRA Affect Clinical Laboratories?

The federal EKRA statute—originally enacted to address healthcare fraud in addiction treatment facilities—was “expansively drafted to also apply to clinical laboratories,” according to New York-based law firm, Epstein Becker and Green. As such, EKRA “applies to improper referrals for any ‘service,’ regardless of the payor. … public as well as private insurance plans, and even self-pay patients, fall within the reach of the statute.”

In “Revised Stark Law, Anti-Kickback Statute Rules Are Good News for Labs,” Dark Daily’s sister publication The Dark Report noted that EKRA creates criminal penalties for any individual who solicits or receives any remuneration for referring a patient to a recovery home, clinical treatment facility, or clinical laboratory, or who pays or offers any remuneration to induce a referral.

According to Epstein Becker and Green, EKRA:

  • Applies to clinical laboratories, not just toxicology labs.
  • Has relevance to all payers: Medicare, Medicaid, private insurance plans, and self-pay.
  • Is a criminal statute with “extreme penalties” such as 10 years in prison and $200,000 fine per occurrence.
  • Exceptions are not concurrent with AKS.
  • Areas being scrutinized include COVID-19 testing, toxicology, allergy, cardiac, and genetic tests.

“For many clinical laboratories, a single enforcement action could have a disastrous effect on their business. And unlike other healthcare fraud and abuse statutes, such as the AKA, exceptions are very limited,” Epstein Becker and Green legal experts noted.

“Therefore, a lab could potentially find itself protected under an AKS safe harbor and still potentially be in violation of EKRA,” they continued. “The US Department of Health and Human Services (HHS) and the DOJ have not provided any clarity regarding this statute (EKRA). Without this much needed guidance clinical laboratories have been left wondering what they need to do to avoid liability.”

EKRA versus AKS and Stark Law

HHS compared AKS and the Stark Law (but not EKRA) by noting on its website prohibition, penalties, exceptions, and applicable federal healthcare programs for each federal law: 

  • AKS has criminal fines of up to $25,000 per violation and up to a five-year prison term, as well as civil penalties.
  • The Stark Law has civil penalties only.
  • AKS prohibits anyone from “offering, paying, soliciting, or receiving anything of value to induce or reward referrals or generate federal healthcare program business.”
  • The Stark Law addresses referrals from physicians and prohibits the doctors “from referring Medicare patients for designated health services to an entity with which the physician has a financial relationship.”

EKRA is more restrictive than AKS, as it prohibits some compensation that AKS allows, healthcare attorney Emily Johnson of McDonald Hopkins in Chicago told The Dark Report.

“Specifically, AKS includes a safe harbor for bona fide employees that gives an employer wide discretion in how employees are paid, including permitting percentage-based compensation,” Johnson wrote in a Dark Daily Coding, Billing, and Collections Special Report, titled, “Getting Paid for COVID-19 Test Claims: What Every Clinical Lab Needs to Know to Maximize Collected Dollars.”  

EKRA Cases May Inform Clinical Laboratory Leaders

Recent enforcement actions may help lab leaders better understand EKRA’s reach. According to Holland and Knight:

  • Malena Lepetich of Belle Isle, Louisiana, owner and CEO of MedLogic LLC in Baton Rouge, was indicted in a $15 million healthcare fraud scheme for “allegedly offering to pay kickbacks for COVID-19 specimens and respiratory pathogen testing.”
  • In S-G Labs Hawaii, LLC v. Graves, a federal court concluded the laboratory recruiter’s contract “did not violate EKRA because the recruiter was not referring individual patients but rather marketing to doctors. According to the court, EKRA only prohibits percentage-based compensation to marketers based on direct patient referrals.”
  • In another federal case, United States v. Mark Schena, the court’s rule on prohibition of direct and indirect referrals of patients to clinical labs sent a strong signal “that EKRA most likely prohibits clinical laboratories from paying their marketers percentage-based compensation, regardless of whether the marketer targets doctors or prospective patients.”

What can medical laboratory leaders do to ensure compliance with the EKRA law?

In EKRA Compliance, Law and Regulations for 2023, Dallas law firm Oberheiden P.C., advised clinical laboratories (as well as recovery homes and clinical treatment facilities) to have EKRA policies and procedure in place, and to reach out to staff (employed and contracted) to build awareness of statute prohibitions and risks of non-compliance.

One other useful resource for clinical laboratory executives and pathologists with management oversight of their labs’ marketing and sales programs is the upcoming Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management. The conference takes place on April 25-26, 2023, at the Hyatt Regency in New Orleans. A panel of attorneys with deep experience in lab law and compliance will discuss issues associated with EKRA, the Anti-Kickback Statutes, and the Stark self-referral law. 

Donna Marie Pocius

Related Information:

The State of EKRA

Four Years After EKRA: Reminders for Clinical Laboratories

Revised Stark Law and AKS Rules Are Good News for Labs

Comparison of the Anti-Kickback Statute and Stark Law

Getting Paid for COVID-19 Test Claims: What Every Clinical Lab Needs to Know to Maximize Collected Dollars

EKRA Compliance, Law and Regulations for 2023

California Clinical Laboratory Owners among 21 Defendants Indicted or Criminally Charged for COVID-19 Test Fraud and Other Schemes Totaling $214 Million

Federal agents allege ‘healthcare fraud abuses erode the integrity and trust patients have with those in the healthcare industry’

Here’s yet another example of how federal and state law enforcement agencies intend to further crack down on fraud involving COVID-19 testing, financial relief programs, vaccination cards, and other pandemic-related programs.

The United States Department of Justice (DOJ) announced it has charged the owners of a Calif. clinical laboratory—as well as 19 other defendants—for their roles in fraudulent billing, kickbacks, and money laundering schemes to defraud Medicare of more than $214 million.

Imran Shams and Lourdes Navarro—owners of Matias Clinical Laboratory, Inc., in Baldwin Park, Glendale, Calif.—which was doing business as Health Care Providers Laboratory, Inc. (Matias)—were charged along with the other defendants with participating in fraud that took place in nine federal court districts.

The indictment alleges the pair paid kickbacks to marketers to obtain specimens and test orders. The lab company owners then laundered their profits through shell corporations in the US, transferred the money to foreign countries, and used it to purchase “real estate, luxury items, and goods and services for their personal use,” according to court documents.

“While millions of Americans were suffering and desperately seeking testing and treatment for COVID-19, some saw an opportunity for profit,” said Assistant Attorney General for the Criminal Division Kenneth A. Polite Jr., JD, during a news conference at the Justice Department, The New York Times reported.

“The actions of these criminals are unacceptable, and the FBI, working in coordination with our law enforcement partners, will continue to investigate and pursue those who exploit the integrity of the healthcare industry for profit,” said Luis Quesada of the Federal Bureau of Investigation’s (FBI) Criminal Investigative Division in a press release.

Assistant Director Luis Quesada of the FBI

“Throughout the pandemic, we have seen trusted medical professionals orchestrate and carry out egregious crimes against their patients all for financial gain,” said Assistant Director Luis Quesada (above) of the FBI’s Criminal Investigative Division in a DOJ press release. “These healthcare fraud abuses erode the integrity and trust patients have with those in the healthcare industry, particularly during a vulnerable and worrisome time for many individuals.” Clinical laboratories throughout the US should be aware of increased scrutiny to Medicare billing by the DOJ. (Photo copyright: El Paso Times.)

According to the DOJ’s Summary of Criminal Charges, “Matias” Clinical Laboratory also “performed and billed Medicare for urinalysis, routine blood work, and other tests, despite the fact that Shams had been excluded from all participation in Medicare for several decades.” The indictment alleges that Shams and Navarro fraudulently concealed Sham’s role in the clinical laboratory and his prior healthcare-related criminal convictions.

Navarro’s attorney, Mark Werksman, JD, Managing Partner at Werksman, Jackson and Quinn LLP, told The Wall Street Journal (WSJ) Navarro would plead not guilty to charges.

“She always tried to follow the law and provide appropriate and quality testing services to the laboratory’s patients. She looks forward to clearing her name in court,” Werksman said.

However, both Navarro and Shams have a checkered past with law enforcement agencies. According to a State of California Department of Justice news release, in 2000, the two were convicted in California on felony counts of Medi-Cal fraud, grand theft, money laundering, and identity theft for using the names of legitimate physicians without permission and filing thousands of false claims with the state for medical tests never performed.

The Calif. Attorney General’s Division of Medi-Cal Fraud and Elder Abuse (DMFEA) seized approximately $1.1 million in uncashed warrants, which were returned to the Medi-Cal program. Since the 2000 case, Shams has been barred from filing for Medicare reimbursement, the New York Times reported.

Other Felony Indictments and Criminal Complaints for Healthcare Fraud

In a separate case, the DOJ announced Ron K. Elfenbein, MD, 47, of Arnold, Md., was charged by indictment with three counts of healthcare fraud in connection with an alleged scheme to defraud the US of more than $1.5 million in claims that were billed in connection with COVID-19 testing. Elfenbein is owner and medical director of Drs Ergent Care, LLC, which operates as FirstCall Medical Center. Elfenbein allegedly told his employees to submit claims to Medicare and other insurers for “moderate-complexity office visits” even though the COVID-19 test patients’ visits lasted five minutes or less.

And in April, the DOJ filed a criminal complaint against Colorado resident, Robert Van Camp, 53, for allegedly forging and selling hundreds of fake COVID-19 vaccination cards, which he sold to buyers and distributors in at least a dozen states.  

“Van Camp allegedly told an undercover agent that he had sold cards to ‘people that are going to the Olympics in Tokyo, three Olympians and their coach in Tokyo, Amsterdam, Hawaii, Costa Rica, Honduras,’” the DOJ said in a news release, CNBC reported.

Van Camp also allegedly told that agent, “I’ve got a company, a veterinary company, has 30 people going to Canada every f— day, Canada back. Mexico is big. And like I said, I’m in 12 or 13 states, so until I get caught and go to jail, f— it, I’m taking the money, (laughs)! I don’t care,” the DOJ stated.

Clinical laboratory directors and pathologists know these fraud charges provide another example of how the misdeeds of a few reflect on the entire healthcare industry, potentially causing people to lose trust in organizations tasked with providing their healthcare. 

Andrea Downing Peck

Related Information:

Justice Department Announces Nationwide Coordinated Law Enforcement Action to Combat Healthcare-Related COVID-19 Fraud

Alleged Covid-19 Fraud Schemes Totaling $150 Million Draw Criminal Charges

Maryland Doctor Facing Federal Indictment for COVID-19 Healthcare Fraud Scheme Is Part of a Nationwide Coordinated Law Enforcement Action to Combat Health Care Related COVID-19 Fraud Announced by the Justice Department Today

Attorney General Lockyer Announces Four Arrests, Two Convictions in Crackdown on Medi-Cal Fraud by Blood Laboratories

U.S. Department of Justice: Summary of Criminal Charges

U.S. v. Imran Shams and Lourdes Navarro, aka ‘Lulu,’ Defendants

DOJ Announces $150 Million in COVID Health Fraud, Bogus Vaccination Prosecutions Nationwide

The Justice Department Charged 21 People over Coronavirus-Related Fraud Schemes

Maryland Doctor Facing Federal Indictment for COVID-19 Healthcare Fraud Scheme Is Part of a Nationwide Coordinated Law Enforcement Action to Combat Healthcare Related COVID-19 Fraud Announced by the Justice Department Today

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